Compliance with regulations

Recent articles and public comments by the Northern Plains Resource Council (NPRC), suggests that Fidelity Exploration & Production Company has gone out of its way to avoid environmental regulations in Montana. Nothing could be further from the truth.

In 1997, when Fidelity's predecessor company began to consider development of coalbed natural gas (CBNG) in Big Horn County, the Bureau of Land Management (BLM) was contacted and asked to begin the environmental analysis that was necessary before development could take place. Fidelity worked with the BLM on its field-level environmental analysis until 2000, when the decision was made to prepare an Environmental Impact Statement (EIS).

When Fidelity sought to discharge water from its CBNG operations, we recognized the possible need to get a permit from the Montana Department of Environmental Quality (DEQ). We sought a permit in spite of multiple assurances from the DEQ that Montana law did not require a permit for discharge of unaltered groundwater. The Montana DEQ issued a discharge permit 16 months later. NPRC then sued Fidelity a week after the permit was issued. The argument that CBNG water is not a pollutant was made in District Court as Fidelity defended itself while complying with Montana law. The District Court agreed with Fidelity's argument even though the Court of Appeals did not.

In 2000, when Fidelity evaluated the need for Corps of Engineers permits associated with its construction activities, we engaged a Montana engineering firm to evaluate whether construction was occurring in "waters of the United States" and whether a permit was required. After onsite review of the land on which construction was to take place, the engineering firm determined that there were only a limited number of instances where a permit might be necessary and they prepared permit applications for Fidelity. The Corps conducted onsite inspections and determined that the work and areas covered by the permit applications were either covered by nationwide permits or were not waters of the United States. The Corps informed NPRC and Fidelity of their decisions. Nonetheless, the NPRC filed its lawsuit against Fidelity, which was recently settled without any penalty against Fidelity and without any finding of wrongdoing.

NPRC has repeatedly expressed its desire for us to make use of the water. Fidelity has long recognized that beneficial use of the water is in everyone's best interest. The final EIS identified beneficial use of produced water as the preferred management alternative. To that end, Fidelity filed for permits with the Montana Department of Natural Resources and Conservation (DNRC) to use the water for industrial purposes at local coal mines and to provide water for livestock. The NPRC and members of its CBNG attack committee have protested those applications. Additionally, Fidelity - at its own expense - continues to research various irrigation methods in order to expand the beneficial uses of this water resource while protecting soil integrity.

The NPRC refuses to acknowledge anything as being "right" if it is not their definition of "right." Even though the NPRC and its small band of CBNG obstructionists claim Fidelity is an irresponsible operator and have made personal attacks on its officers -- the facts speak for themselves. Fidelity has sought to comply and has complied with the federal, state and local regulations relating to its business. It has entered into agreements with landowners where its development is taking place and has established sound, trusting working relationships. Fidelity is listening, every day, to farmers and ranchers on whose land we are developing natural gas.

Fidelity is producing valuable CBNG resources in Montana and has paid over $6.5 million of production taxes to date to the state. We intend to continue to work through Montana's stringent permitting and regulatory process to develop a critically needed resource. We will continue to do business in the same straightforward and honest manner that our corporation has for the past 80 years. We respect and value our neighbors and will always strive to do our job better. We will not, however, be bullied into unreasonable and impossible business decisions by a small band of activists bent on obstructing the process.

Mike Caskey
Executive vice president and chief operating officer
Fidelity Exploration & Production Company